These âsuperstarsâ have one key thing in common⦠[The Jolt with Stephen McBride] How to find the 2% "superstar" stocks Happy Friday! The S&P 500 is having a rough September, [as usual](. Itâs fallen 4% in the past month. But stocks are up today as I type in the early hours. Many folks are blaming the looming US government shutdown for the drop. Hereâs what Iâm thinking⦠- What Washingtonâs shutdown means for your money. Yawn. When it comes to government shutdowns, weâve âbeen here, done thatâ so many times. This is politicians being politicians. Itâs all theater. No different than the new show on Broadway (just far worse acting). Hereâs the important part: Stocks usually RISE when the government closes! Take two of the most recentâand longestâshutdowns in history. The S&P 500 went up during the 2018 and 2013 closures... and was much higher one month later: The government will likely shut down on Sunday. But I expect the whole debacle to be resolved in a day or two. Even if it drags on longer, thereâs no need to panic, as the above chart shows. There are legitimate reasons to be cautious right now (like inflation potentially reaccelerating). Bureaucrats taking a few days off work isnât one of them. - This sell-off is still perfectly normal. Itâs the final trading day of September, and [as I warned you two weeks ago](, itâs been a rough month to own stocks. September is the only month in which stocks have averaged a decline over the past 100 years, as this chart shows: Iâve been writing RiskHedge research since 2018. The S&P 500 has had more than 15 pullbacks of 5% over this period. This is just another routine 5% pullback. And just like all the other times, Iâm here to guide you through whatever the markets throw our way. Bottom line: Donât read too much into this seasonal stock market weakness. If markets go off-script, Iâll be the first to tell you about it. But unless that happens, this sell-off is just short-term noise. - PROOF: You must invest in disruptive megatrends I get up âbefore the enemyâ on weekends to squeeze in a couple quiet hours of research. In this case, my kids are the âenemy.â Saturdays and Sundays are family time. The only way Iâm working is if I finish before their day starts. Last weekend I read a great paper by Michael Mauboussin, whoâs one of the top financial writers of our generation. I recommend checking out his book, More Than You Know. My big takeaway from his new paper, Birth, Death, and Wealth Creation, is that you MUST invest in great businesses profiting from disruptive megatrends. US companies created $55 trillion worth of wealth for shareholders over the past century. But just 2% of stocks accounted for $50 trillionâ91%âof those gains! And those superstar stocksâthe companies that created the most wealthâall had one thing in common. They all spearheaded a world-changing trend. (The only exception was ExxonMobil). Source: Morgan Stanley Apple (AAPL) handed us smartphones⦠Microsoft (MSFT) put a PC in every home⦠Google (GOOG) invented internet ads⦠and Amazon (AMZN) made buying stuff online âthe norm.â These four superstar stocks (0.01% of all stocks) handed investors almost $7 trillion in profits! This is further proof the surest way to get rich in the stock market is to invest in companies spearheading fast-growing trends. Thatâs why itâs a pillar of our framework in Disruption Investor. Of course, all the existing tech giants are old news. Our research suggests their best days are behind them, and I wouldnât buy any of them today. Weâre on a mission to unearth the new megawinners⦠up-and-comers set to be the ânextâ Apple or Amazon and make investors rich. - Say âhelloâ to your new ârobo-mechanic.â [ChatGPTâs latest upgrade]( just dropped, and itâs even more mind-blowing than I imagined. Get ready to hear a lot more about âmultimodalâ artificial intelligence (AI). Thatâs tech-speak for ChatGPT can now see, hear, and speak. And the new features are AMAZING. The AI chatbot can now understand images. I can take a picture of my bike brakes and ask it, âHow do I change the brake pads?â⦠and itâll walk me through step by step. ChatGPT will also be able to tell you why your grill wonât start... or how to fix that leaky tap. No more scrambling to ring a plumber at 9 pm on a Sunday! If my grandfather were alive to use multimodal AI, heâd think it was magic. And yet⦠this is the WORST artificial intelligence is ever going to be. Imagine what AI tools like ChatGPT will be capable of a few years from now. Theyâll change almost everything about our daily lives. Just like I can use AI to fix my bike... companies are using it to boost sales and slash costs. Itâs creating massive winners and losers in the stock market. And my goal is to put you on the right side of this disruption. - Todayâs dose of optimism... No matter how busy I am, or how late it is, I never skip bedtime stories with my two young kids. Watching TV is easier. Giving them the iPad is easier. Sometimes I feel like putting them straight to bed. But Iâm determined to make them love reading books. Almost all the most successful people in history are ferocious readers. Super-investor Warren Buffett once said, âThe advice I would give is to read everything in sight. And to start very young.â His business partner, Charlie Munger ([who we talked about on Monday]() said, âIn my whole life, I have known no wise people⦠who didnât read all the time.â To get your kids to read, you have to be a reader. Make sure to have shelves full of books at home⦠let them see you read⦠and never skip bedtime stories. Have a great weekend, and Iâll talk to you on Monday! Stephen McBride
Chief Analyst, RiskHedge Suggested Reading... [Welcome to The Jolt! (formerly RiskHedge Report)](
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